World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

Saturday, February 26, 2011

Friday, February 25, 2011

Equity futures are bouncing higher this morning. The dollar is higher after getting very close to long term support and note the usual correlation of dollar up/ stocks down is not happening so far. Bonds are higher too, oil and gold are up slightly, and most food commodities are higher following losses yesterday.

The first revision for Q4 GDP came out much weaker, falling from the previously contrived number of 3.2% to the still ridiculous 2.8% “growth.” This comes on expectations that it would be revised upwards to 3.4%. The weakness is in exactly the areas I pointed to when this report first came out – but let’s face it, this report is overstated by huge amounts – I’m guessing our actual GDP is 40% (or more) less than what we spin to the world. Keep in mind that as the quantity of money grows, the GDP APPEARS to grow, but that does not mean that we are actually producing more goods and services. Here’s Econoday spinning the party line:

HighlightsThe fourth quarter turned out to be not as strong as initially estimated. Fourth quarter GDP growth was revised down to 2.8 percent annualized growth from the advance estimate of 3.2 percent. The new figure fell short of analysts' forecast for 3.4 percent. However, the fourth quarter was still marginally healthier than the third quarter pace of 2.6 percent.

The downward revision to the percent change in real GDP primarily reflected an upward revision to imports (less negative) and downward revisions to state and local government spending and to personal consumption expenditures that were partly offset by an upward revision to exports.

Notably, demand numbers were revised down somewhat. Final sales of domestic product were bumped down to 6.7 percent from the initial estimate of 7.1 percent. Final sales to domestic purchasers (takes out net exports) were nudged down to 3.1 percent from the original estimate of 3.4 percent for the fourth quarter.

Separate from the direction of revisions, some components in absolute strength are relatively healthy. PCEs came in at an annualized 4.1 percent, compared to 2.4 percent in the third quarter. Nonresidential fixed investment gained 5.3 percent in the latest period, residential investment rose modestly, and net exports improved sharply. In contrast, inventory investment slowed significantly, slicing off 3.7 percentage points from GDP growth. And government purchases declined slightly.

Year-on-year, real GDP in the fourth quarter is up 2.7 percent, compared 3.2 percent in the third quarter.

On the inflation front, the GDP price index was little revised, coming in at 0.4 percent, compared to the initial estimate of 0.3 percent. The market median forecast was for 0.3 percent. However, the recent spike in oil prices makes the fourth quarter numbers basically irrelevant.

Today's report is a disappointment as equity futures eased a bit on the news though remained notably positive. The still moderate growth in the economy certainly explains currently sluggish growth in employment. But more recent monthly data show the recovery continuing, albeit at a moderate pace.

To me this report is just a flat out lie. It is disinformation on behalf of private banks. The disinformation in economics has become so extreme that it’s just embarrassing – fraud is everywhere you look. In the case of GDP, we let financial engineers create phony paper and debt, and we count that as today’s production. But the truth is that debt should be subtracted from GDP because it is an obligation, and “production” based upon it is borrowed from the future. Also, the GDP deflator vastly understates inflation which overstates productivity. And so the spin by manipulating this number leads people to believe that we are far more productive than we actually are.

And that makes the disinformation nothing more than a marketing tool to convince people to borrow and spend even more. The result is massive misallocation of resources. Phony GDP reporting is just one level of disinformation, it permeates all of our economy.

And we’ve become a terrific society at marketing – that is our real strength. Almost all new technology feeds marketing and visa versa – just look at Google, the world’s largest advertising company. That’s exactly what they are, they are not a technology company, all their revenues come from advertising.

But where, exactly, does marketing cross the line? I mean at some point marketing crosses over to influence people’s minds in ways that are not healthy for society, much less the individual being influenced. Every aspect of our society is now permeated with this false façade of marketing, even our social experiences.

The influence of greed and the pursuit of money has distorted our reality. My eye opening experience to the way the world really works was when I was in the Air Force. As a pilot I was ordered to take a series of six Anthrax vaccines. The story line was filled with blatant disinformation – “If you knew what we knew you’d willingly take it!” “Veterinarians have taken it for years.” “It’s safe, has limited side effects, and is FDA approved.” All lies. All marketing. But it was far worse than that in the real world, it definitely crossed the line into what the military calls “psyops.” That’s influencing the way people think by planting thoughts and ideas into their heads that are not true.

In the case of the Anthrax vaccine, it was all about the money too. A member of the Bin Laden family who lived in Europe bought the only manufacturer of Anthrax vaccine, Bioport, Inc. of Lansing, Michigan, and then gave former Chairman of the Joint Chiefsof Staff, Admiral Crowe, 11% of Bioport stock if he would go to the Pentagon and lobby to have the vaccine made mandatory for all military personnel, even the 90 pound pregnant female working the desk at McChord AFB.

This despite the fact that no person in any military in the history of the planet had ever been exposed to anthrax – ever. And much less in a weaponized form. The end result is that many people were injured from the shot. Many refused and legal battles ensued. I resigned over the issue without taking a single shot, thus forfeiting any retirement benefits, as did approximately 25% of my then reserve unit who could afford to. I felt very sorry for those who could not exit and were forced to take it against their will. And I felt very sorry for the collapse of morals and ethics of those who were dispensing the “Kool-Aid” like the military medical profession who should have known better yet went against their own Hippocratic Oath of doing no harm.

Then, once the program was challenged and it was learned that their propaganda was all lies, suddenly real anthrax began to circulate in the mail, killing several people, and even winding up on Senator’s desks. We still do not know who did this, but recently a lab worker “committed suicide” and the FBI is trying to pin it on him. I pin it on greed. This was a blatant attempt to legitimize the threat of anthrax so that Bioport would profit. That’s why the Senators were targeted. It is blatant, and it’s a for real conspiracy that’s still ongoing. It was psyops that turned onto outright terrorism.

That is my Air Force example of psyops, the spinning of reality to achieve a money related goal.

The U.S. Army illegally ordered a team of soldiers specializing in "psychological operations" to manipulate visiting American senators into providing more troops and funding for the war, Rolling Stone has learned – and when an officer tried to stop the operation, he was railroaded by military investigators.

Psyops used against politicians to get money? Taxpayer paid employees using psyops to get more money, more employees. Think about that.

And I think back to my young days as a new pilot knowing how illogical "use it or lose it" budgeting was. Ordered to do so despite objections, I flew hours and hours in empty airplanes using it, all quit unnecessarily.

And we wonder why we spend more on defense than the rest of the entire world combined. And we wonder how it is that we are a bankrupt nation.

We are a broken nation. We have crossed the line between marketing and psyops – way crossed the line. The GDP report is the same exact thing. As are most of the economic reports I see day in and day out. They are not real. They are designed to separate you from your money.

And the psyops has an impact. “Consumer” Sentiment just came out higher to go along with the inflated supply of money – 77.5, up from 75.1. Still depression era levels, but come on… come join the party everything is “growing!”

Well, except for things that exist in reality, like new homes. Where just yesterday it was reported that New Home Sales fell to only 284,000, one of the lowest numbers in modern history, and well below the previous month and expectations as well. That’s because expectations are based on psyops, homes exist in reality.

Thursday, February 24, 2011

Equity futures fell sharply overnight, but are almost back to even just prior to the open. The dollar is down and is nearing major support, bonds are higher, oil shot considerably higher but has pulled back as reports come in that the people are taking control of several key areas in Libya. Gold and silver are flat to down slightly, as are most food commodities.

Of course starvation and revolution are crowns to be worn for the elite who now sing the praises of little lying Timmy Geithner:

Feb. 24 (Bloomberg) -- Treasury Secretary Timothy Geithner says the U.S. economy is in a “much stronger position” than it was two years ago.

The same could be said of him.

Once the focal point for criticism of the administration’s struggle to resolve the financial crisis, opposed by almost all Senate Republicans for confirmation, and the butt of jokes by late-night comedians, Geithner has emerged as President Barack Obama’s most powerful economic policy maker. His influence on everything from overhauling housing finance to remaking the corporate tax code is reminiscent of the clout that Robert Rubin and James Baker enjoyed when they ran Treasury.

“Many would have faltered during those tough days at the beginning, but he didn’t,” said Roger Altman, founder of the investment bank Evercore Partners Inc. and a former deputy Treasury secretary under President Bill Clinton. “And, between the success of the TARP investments, the auto rescues, and the overall recovery in the banking system, he’s now on top.”

That type of obviously planted story would be funny if it weren’t so sick, and Geithner wasn’t such a tragedy for the globe.

The Chicago “Fed” released their National Activity Index which fell in January from a very small rise in December:

HighlightsThe Chicago Fed national activity index fell to minus 0.16 in January from December's plus 0.18 (revised from plus 0.03). The three-month average, however, improved to minus 0.10 from minus 0.14 (revised from minus 0.22). Negative readings suggest that U.S. growth is slightly below historical trend and that inflation pressures one year out will be subdued. Details show a smaller contribution from production and employment, a larger contribution in orders, and less though still substantial drag from consumption and housing.

Oh yeah, inflation is subdued and “growth” (measured in dollars) is slightly below historical trend. Riiiggghhht. More disinformation/ mind control for the masses whose food bills are skyrocketing and gasoline price has already landed on the moon.

But Durable Goods Orders (as measured in dollars) did rise in the month of January, but only due to a large month of aircraft orders (the only thing we really make besides military hardware and hamburgers anymore) – without those, this report is very weak, falling 3.6% in the month. Here’s Econoday:

HighlightsDurables orders made a nice comeback in January but there is a lot in the detail. Durables orders in January rebounded 2.7 percent, following a revised -0.4 percent dip in December (previously estimated at down 2.3 percent). Excluding transportation, new orders for durable goods fell back, declining 3.6 percent after a 3.0 percent rise in December and 4.6 percent boost in November. The headline number looks very good for January but a key question is whether ex-transportation offsets that. Basically, the ex-transportation decrease followed two strong months, meaning the decline is not so disconcerting. Durables manufacturing continues on a moderate uptrend.

Outside of transportation, gains were seen in primary metals, up 1.1 percent; fabricated metals, up 0.8 percent; and "other," up 1.7 percent. Ex-transportation was led down by a 13.0 percent drop in machinery orders. Also retreating were computers & electronic parts, down 6.8 percent, and electrical equipment, down 4.9 percent.

Business investment in equipment declined after two notable gains. Nondefense capital goods orders excluding aircraft in January fell 6.9 percent, following a 4.3 percent increase in December and a 3.3 percent rise in November. Shipments for this series slipped 2.0 percent, following a 2.5 percent increase in December.

Overall, the headline number for durables orders likely overstates current strength while the ex-transportation number for January probably overstates current month weakness. Durables orders are extremely volatile and the underlying trend is moderately positive.

The reason this index is so volatile is that we don’t make anything anymore, and aircraft orders can swing the entire report by huge amounts. Imagine a strong industrial base, an airplane or two would not have such an effect. And in fact, this report did not used to be so volatile - what's that say?

Weekly Jobless Claims dipped back below 400,000, coming in at 391k. This was lower than last week’s 410k, and better than the 405k guess by the “experts.”

HighlightsJobless claims data are indicating meaningful improvement for the labor market. Initial claims for the February 19 week fell 22,000 to 391,000 (prior week revised 3,000 higher to 413,000). The four-week average confirms the improvement, falling a sizable 16,500 to 402,000 for a nearly 30,000 decline from the month-ago level. A break below 400,000 in future weeks would begin to raise expectations for sizable payroll gains and extending declines for the unemployment rate. The Labor Department isn't citing any special factors in the data though California was partially estimated in the week while three other states were fully estimated.

Continuing claims also fell substantially, down 145,000 in data for the February 12 week to 3.790 million. The four-week average is down 55,000 to 3.893 million for an 87,000 month-to-month improvement. The unemployment rate for insured workers fell one tenth to 3.0 percent. In other data, total unadjusted emergency claims, in data for the February 5 week, rose nearly 56,000 to 3.685 million. Total unadjusted unemployment claims fell nearly 90,000 to 9.159 million, also data for the February 5 week.

The jobs market, based on initial claims, looks to be finding traction, right at the time that oil prices are spiking. Markets are showing little reaction to this very positive report.

Sure, when you can’t manage the real data, just guess and make it look good. The unadjusted guess at data did fall below 400k, but the number of people claiming Emergency Benefits rose by 55K. Again, the economy is still losing jobs as this number needs to be below 350k to show evidence of that. The trend is down which is good, but after years of job shedding one has to wonder how many more can be shed.

The speculation and hot money that poured into food commodities is now obviously leaving, at least somewhat. Bloomberg is pinning the decline on speculators spooked by all the unrest around the world. But to me that just sounds contrived as heck, as unrest should lead to an even more negative spiral as production depends on stable governments. So, I’m left to feel manipulated by those who produce the money once again. Did they wreak the havoc they desired and now are going to pull back the speculation in food, or is this just a natural wave reversal? I’m mentioning this only because it doesn’t feel natural to me, nor did the run up. But then again the markets are no longer real in general, having been subverted by the constant addition of hot money that’s controlled by HFT computers.

The VIX remained above the upper Bollinger yesterday. When we get a bounce, this will close back inside the range and will produce a buy signal, but not yet:

Yesterday’s decline took the Transports below its 50dma, but the NDX and RUT bounced off it. The DOW and S&P are still well above it and thus it is looking to offer support, at least temporarily, to the selling. In the chart of the SPX below, you can see that the bottom boundary of the rising wedge I pointed out yesterday did, in fact, provide support to the market:

With the Transports making a lower low, they are now established in a downtrend along with the Emerging Markets. Note the much higher volume on the selling days of the Transports:

Note that the point & figure chart generated a new bearish target for the Transports, reflecting the broken support and lower low:

The dollar, as seen on the weekly chart below, is just barely above major long term support.

The Yen is gaining a large amount today, this is the resumption of the risk on trade in its present form. What occurs at support here for the dollar is critically important. Should it continue down, below support, then it is signaling that the hot money is going to continue to pour in and high inflation will rule. However, should it bounce off support, then it’s possible that another leg of deflation could strike. So, it will be important to watch this level, however, I don’t really put that much credence in this index as I know it is simply a relative indicator. I know that all the currencies in “the basket,” like the Yen and Euro, are also massively printing and thus we are all going down in real terms together – thus higher food, oil, gold, and silver prices (really anything measured in dollars, including GDP and most other economic reports).

Watch today’s candle on NYMEX crude oil. It spiked well over $100 a barrel but has since returned. If it closes below $100, then this candle could look toppy as it does in its present form. However, should it rise above $100, then more may be in store. Of course much will depend on the situation in the Middle East in this regard:

Wednesday, February 23, 2011

Equities are flat just prior to the open after being higher in after hours trading. The dollar is down, bonds are higher, oil is adding onto huge gains, gold is pushing higher above the $1,4000 mark, while food commodities are being slammed backwards.

Yesterday’s rout was obviously the large move called for by the prior small movement in the McClelland Oscillator. The McClellan moved to firmly negative territory yesterday, meaning that most stocks are just like that established in downtrends. As a reminder, don’t forget that the market is still under the auspices of a valid Hindenburg Omen.

Most short term up trends are clearly broken, however, the longer term ones are not yet. In the 9 month daily chart below you can see the rising wedge and that its lower boundary is right in the 1300 area:

In yesterday’s daily thread we discussed the fact that the National Association of Realtors (NAR) is being outed for overstating home sales for the past decade – by as much as 15%. No surprise to us, this is exactly what I’ve been harping about in regards to the bad data and disinformation. It is a product of a serious conflict of interest. Organizations who have a vested interest in the outcome should NEVER be allowed to compile and report data on their own industry. Misinformation such as that causes misallocation of resources within an economy.

And I’ve been harping on the Mortgage Banker’s Association (MBA) for producing what I believe is completely bogus data – as in not even close to reality. They are not only conflicted, but they are a hypocritical narcissistic organization that continues to damage our economy with their business practices and false reporting of loan conditions within the mortgage industry. Their latest rendition is that, get this, in the past one week alone, mortgage applications supposedly rose by 5.1% with Refinancings rising by a completely unbelievable 17.8%! In just one week!

If you believe that, then I’ve got some swamp land in Florida to sell you, just ignore that oil sheen on the water next to those dead dolphins. Here’s Econoday biting on the MBA’s snake oil:

HighlightsBorrowers are locking in lower interest rates, making for a burst in both refinancing and purchase applications. Refinancing applications jumped 17.8 percent in the February 18 week with purchase applications up 5.1 percent, pulling levels back up from two weeks of declines. The average 30-year mortgage rate, reflecting demand for Treasuries tied to Middle East unrest, fell 12 basis points in the week to an average 5.00 percent.

Riiiight. “Whatever” is what goes through my mind when I see reports like this – completely disconnected from reality. So much so that even ordinary people are finding it difficult to believe the constant flow of disinformation. And gee, what are we seeing as a response to the despots around the world?

And that same response is happening right here in the good ol’ U.S. of A. And it’s spreading as the impossible math of central banker debt pressures more states. I just read that Detroit, after closing 54 schools last year is now slating another 70 for closure – HALF of all their schools! And the result is that classroom size is going to double with each teacher working with 60 (!) children. I can tell you from my wife’s experience that even managing 30 kids is too much. Many children are coming to school not only unprepared to learn, but they are coming from families so under pressure that they act out in negative manners due to their surroundings. And, YES, I blame the central bankers for creating that environment. Never ending debt means never ending price inflation. Wages fail to keep up, and now both parents are required to work just to afford overinflated home values, overinflated auto values, overinflated everything. In other words, inflation pressures the family core – the more on the margin they are, they worse they are affected.

Let me share a story my wife brought home last night (she’s a principal in a Middle-School)…

Boy is brought to her office who is acting out in class and being disruptive to the other students, refusing to follow directions from the teacher. Minor stuff, not like gang activity, guns, and drugs she deals with on a daily basis (we’re talking south of Seattle here, not East LA). She sits the normally well behaved boy down and asks if there’s something outside of class that’s bothering him? Turns out that three of his siblings were just taken to child protective services, his father was arrested, and neither of his parents have a job.

That boy absolutely is not ready to learn – normally a good boy, he has become a management problem. This is repeated over and over and over. Some of the stories she brings home are outright scary. Sixty Detroit kids per class? Oh yeah, no child left behind there.

And thus the riots in the streets by frustrated teachers who mostly don’t draw the same connection I do between the breakdown of the family, to the breakdown of the REAL economy, and that lands right at the feet of the narcissistic central bankers who worry far more about global overpopulation than they worry about the kids, parents, and teachers of Detroit or Seattle, or anywhere other than the private schools they send their own kids to.

But at least I get a good laugh out of reading stuff like this:

Essex South Register of Deeds John O’Brien announced today that he will be seeking over $22 million dollars from the Mortgage Electronic Registration System, “MERS” which represents several major banking conglomerates. O’Brien bases the $22M number on the fact that the Salem registry has recorded over 148,663 MERS mortgages since 1998. After a careful review of a number of these mortgages O’Brien said it became very clear to him that MERS had assigned mortgages to other entities at least twice without paying a recording fee. Based on this information the taxpayers have been defrauded out of $22,299,450 in Southern Essex County alone. It is quite possible that in some cases they may have assigned the notes more than twice resulting in even greater loss of revenue. O’Brien called MERS “one of the greediest schemes ever perpetrated on the American people. They have compromised the integrity of the public land recordation system and in doing so, have wreaked havoc on our economy”.

ABSOLUTELY! MERS is a completely illegal entity whose business model is stealing from every county in the nation. MERS is toast, and the mess created by them is unbelievably huge. Yet another central banker scheme that is completely outside of the rule of law and now collapsing on their heads. Still, the collapse of MERS is evidently a good thing to the markets as it is just another central banker justification to print more money for their HFT computers to feed their ever expanding Ferrari collections.

But while I can laugh at MER’S demise, I weep when I read about GM receiving more than $14 billion (!) in tax cuts from the Federal Government because they are waiving taxes post bankruptcy just for them, allowing pre bankruptcy losses to carry over. Again, this is completely outside of the rule of law. Bankruptcy law is clear in this regard, and those prior losses are not allowed to be deducted past bankruptcy. And so, this is just another $14 billion bailout of GM who gets to report profits to pay their central banker owners while the kids of Detroit are squeezed 60 to a classroom. Get it? Get the teachers marching on the state Capitals?

If you don’t get it yet, you will. Let me explain…

The people of the world are currently at war against the central banks. Most don’t recognize this war yet, but those are the two sides, just take a look around the globe. On one side is the people, and on the other is those WHO control the production of their money.

This is nothing short of a war to determine whether the people of the earth advance humanity, or it becomes ruled by the evil forces of central bankers. I know that sounds like a bad movie plot, but sometimes reality is stranger than fiction. What I expect is that the bankers will create false flag terrorist acts and more false flag wars, all while letting you change their left/right puppets out at the ballot box – thus letting you feel some sense of false control. The only way to stop it is to cure the bad math – and trust me, taking away teachers right to collectively bargain won’t do it, not even close. So get ready, those “other events” I’ve been talking about for years are steaming ahead in fast forward motion.

Tuesday, February 22, 2011

Equity futures are down significantly this morning. The dollar is only slightly higher after being up considerably over the weekend. It appears that bond futures did a contract roll-over this weekend causing them to appear as if they fell, but they are actually up slightly. That was a strange roll-over with a large price difference from one contract to the next. Oil, of course, did a moonshot on the Libya situation, rising more than $7 a barrel yesterday and in holding onto those gains. That puts NYMEX crude just under $100 a barrel, and Brent significantly higher. Food commodities are mostly lower, however corn rose significantly higher in concert with oil, but has since fallen back – such is the new connectedness with ridiculous policies like subsidizing worse than worthless ethanol.

Of course the civil war that has broken out in Libya is just another product of central banker mis-policy that starves those around the world who are living on the margins. But with the impossible math so firmly in control, it is finally becoming so blatantly obvious that no one is even disputing just how bad the math is any longer. The bad math is pressuring food prices, it’s pressuring states, like Wisconsin, to get tough with their budgets.

While they are finally getting tough, they are getting tough in a misdirected way. Yes, they need to shrink government so that they live within their means, but the math is so impossible that doing so is impossible at this juncture without creating civil unrest. The right solution is to clear out the central bankers and then to discharge the debt via some sort of reorganization that causes investors who took mindless risk to eat their losses. That is the way of the world.

And debt investors are going to eat losses soon, one way or the other. As it is now completely obvious, so obvious that even a blind European Central Banker can see it, that central banking money pumping is responsible for creating unconscionable inflation, that, choke, they are even talking – just talk mind you – about raising interest rates:

Feb. 22 (Bloomberg) -- European Central Bank council member Yves Mersch said officials may toughen their language on inflation next week, indicating a readiness to raise interest rates in coming months.

“I would not be surprised at most colleagues concluding that we have upside risks to price stability,” Mersch said in an interview in Luxembourg yesterday. With the economy strengthening and inflation in breach of the ECB’s 2 percent limit, policy makers will “inevitably” have to “rebalance our monetary policy stance,” Mersch said, without giving a timeframe.

Ahhhhh! The horror of it all! Rates higher than zero? Could it be? Nawww, they can’t. At least they can’t without skyrocketing the interest that’s spent on the national debt and all the debt saturated citizens of the planet. Home sales? Home prices? Forgetaboutit.

Speaking of home prices, Case-Shiller 10-city index fell .9% in December, this price decline is up from .8% reported in November. For the fourth quarter, the National Index of Home Prices was down 3.9% from the same quarter a year prior. Here’s Econoday:

HighlightsThe rate of home-price contraction held steady in December, according to Case-Shiller data which shows a 0.4 percent month-on-month adjusted decline for the composite-10 index which is unchanged from November. The rate of year-on-year decline, however, deepened significantly to 1.2 percent from November's year-on-year decline of 0.5 percent (revised from minus 0.4 percent). Declines for the unadjusted data show deepening rates consistent with heavier weather in December vs November. The unadjusted month-to-month decline is 0.9 percent vs November's decline of 0.8 percent. Year-on-year, the unadjusted contraction for the composite-10 deepened to 1.2 percent vs November's 0.5 percent while the composite-20 contraction deepened to 2.4 percent vs November's 1.6 percent.

On the positive side, city by city data shows the isolated appearance of strength though declines continue for most. Quarter-to-quarter adjusted data show easing in year-on-year contraction, to 2.1 percent in the fourth quarter vs the third quarter's contraction of 3.3 percent.

Heavy supply including price competition from foreclosures continues to depress the housing sector. But the economy as a whole, unlike the prior recovery, is moving forward without the housing sector. Price data for January will be posted with tomorrow's existing home sales report and Thursday's new home sales report.

Once again Econospin tries to find positive aspects to the data, but the actual report has many negatives they fail to mention. There is no doubt that a reacceleration of home prices in the downward direction has begun, and we are just now entering the ramp period for Option-Arm resets, just as interest rates are rising.